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Company taxes key to jobs, pay

Senator the Hon. Mathias Cormann Minister for FinanceLeader of the Government in the SenateSenator for Western Australia

9 July 2018

Over the past few weeks, soccer teams from around the world have been competing with each other at the Soccer World Cup in Russia.

That global competition is now into its final phase and incredibly, my country of birth Belgium beat Brazil for a spot in the semi-final. Belgium was competitive and with a bit of luck, combined with their skills and team discipline got on top of Brazil. Imagine if the Belgian Parliament had imposed a rule on their team and their team only, that they had to play each game with a requirement that each player must carry 30kg of rocks in their backpack all throughout their games at the World Cup. Would they still have made it? Most would doubt it.

Yet that is precisely what we are forcing businesses across Australia to do. Businesses in SA and all around Australia are engaged in global competition for capital and markets here and overseas every single day and right now we are forcing them to carry more rocks in their backpack as they compete with businesses from just about every other part of the world where business taxes are substantially lower than here in Australia. Any decision by our Parliament to put businesses and their employees here in Australia at a deliberate, self-inflicted ongoing competitive disadvantage helps businesses and workers compete against us here in Australia, which in turn puts investment and jobs at risk here in Australia.

The truth is that South Australian families wanting to get ahead need their senators to vote for a lower, globally more competitive business tax rate for all businesses — irrespective of their size.

To get ahead, South Australians today and in the future want a good, secure, well-paid job. They want the opportunity to pursue a career in SA, which helps ensure they can provide a good life for their families.

New, secure, well-paid jobs and career opportunities don’t grow on trees. Not in South Australia and not anywhere else in Australia.

They are created and paid for by more successful, more profitable businesses.

About nine out of every 10 working South Australians work in a private-sector business.

Many of those private sector businesses are calling on the Senate to pass the Government’s proposed business tax cut to 25 per cent for all businesses in full. This is not just about them. It is about the opportunity to grow their businesses, so they can hire more South Australians.

If the Government takes less money out of every business, those businesses can invest more. More investment means the business can grow more and hire more workers.

When businesses across Australia create more jobs, it increases competition for workers, with increasing demand for workers the key ingredient for stronger wages growth.

This is important because countries all around the world have cut taxes for their businesses — the US to 21 per cent, Britain to 17 per cent and even France is moving from 33 to 25 per cent.

We can’t leave our businesses behind, because it would be those working for them today or those looking to work for them tomorrow who would pay the price.

If we don’t lock in a tax rate in Australia for all businesses more in line with the global average (of about 25 per cent across the OECD) we will miss out on investment, growth, jobs and higher wages.

Fewer new jobs would mean higher unemployment, which would lead to lower wages, when what we want and need is to secure more jobs and higher wages.

In SA, around 200 businesses would miss out on a lower, more competitive tax rate if the Senate doesn’t support the Government’s proposed business tax cuts in full.

They would be forced to pay 5 per cent more tax just because they managed to grow from a small or medium-sized business at their start to a bigger business today.

It would be a disincentive to grow, which would clearly be counterproductive.

In opposing business tax cuts, Bill Shorten, and anyone else who doesn’t support them, is standing in the way of more investment, stronger growth, more jobs and higher wages. And what makes it worse, as far as Bill Shorten is concerned, he knows it.

That is why we continue to engage with all crossbench senators to secure their support for this very important reform for families in SA and all around Australia.

This is an opinion piece published in the Adelaide Advertiser on 9 July 2018.

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Julia Burns - 0484 312 671

Senator the Hon Mathias Cormann, Minister for Finance and the Public Service, Perth